Good economic news! + metalworking

When I talked to my friend that has a company that TiN coats cutting tools today, he said that after a poor December and a so-so January, his February
is booming! I hope it's a good sign to see industrial cutting tools in high demand.
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Yes, that is a good sign.
I own a small electronic assembly service in Redmond, Oregon. We are seeing a significant increase in business. However, it is coming from companies that have either laid off most of their production workers and now need to have some assembly work done, or another that has had significant price increases from their assembly house and have decided to have the work done locally. Good for us, but bad for the other companies. Economically it is a net zero.
In these times, a company is looking for stability and we offer that. Now, if we can just make it financially for one or two more weeks, we will be ok. Assuming we can get some companies to pay their bills!
We will take any work we can get. And the metal working part is I get to mill more aluminum tooling plates to hold the panels of printed circuit boards in the solder paste stencil machine.
Paul
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The economy is not is bad as the Democrats have been painting it. Today in the WSJ is an article comparing todays economy to 1981 and 1930.
Dan
By BRADLEY R. SCHILLER
President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package. [Commentary] AP
In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.
This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.
Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82. The Opinion Journal Widget
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This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That's more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.
Other economic statistics also dispel any analogy between today's economic woes and the Great Depression. Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.
Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88. Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930s.
Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a "recovery" package that delivers a lot less than it promises. A more cool-headed assessment of the economy's woes might produce better policies.
Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).
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Keep in mind that on the timeline the the recession, we are not yet at the end of the "year after the crash". The crash of 2008 is obviously followed by year 2009, just as the crash of 1929 was followed by year 1930. So, comparing where we are now, with 1930, simply is a "apples to oranges" comparison. When 2009 ends, it could be properly compared to 1930.
So far, the speed of the contraction, given that we are at a much earlier stage in it than we would be at the end of 1930, is very rapid by any standards.
The Great Depression of 1930 and The great Recession of 2009, are both crises of debt and deleveraging. Events of 1981-1982 were of rather different nature, dealing with taming inflation.

Here you are comparing predicions of CBO, with actual course of events.
Without the bailout, banks such as Citibank would fail, money market accounts drawn down, with a quick domino effect to follow, and drop of 9% would not be out of realm of possibilities.

Try to compare it to January 1930.

It follows, reasonably well, the timeline up to early 1930. (which, to me, has no predictive meaning).

This article is intellectually dishonest, as he intentionaly compares early stages of this recession with late stages of 1930's depression.
i
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wrote:

Manufacturers that were doing their own coating have shut down those departments and are buying the service. There are also fewer people left doing this work. TiN coating has been obsolete for some years now.

It also ignores the eight trillion dollars pumped into the economy during the last fifteen months of the Bush administration. Badly done or not, the world would have reverted to stone axes and caves had the financial services and insurance industries been allowed to collapse on their own.
JC
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I'm not a big fan of regulation but finance and insurance is a place that a bit of goverment looking out the rest of us might not be too bad.
It is hard to bullshit your way making real physical products but numbers relying on other numbers is a prime place for the bs artist to do their dirty work.
Wes
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Wes, I think that by now is it is clear that any activity leading to "creation of money", such as banking in all forms, need to be regulated with a very heavy hand.
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So, in the beginning of 2009, we are about where we were in early 1930, with respect to GDP drop and such.
The difference is that in 1929 and prior, the government did not pump in ayn comparable amount of money, and now it did.
This is ominous.
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On Sat, 14 Feb 2009 12:34:16 -0600, Ignoramus9596

1932 was probably the worst year of the Great Depression....so we havent hit bottom yet by any means
Gunner
"Upon Roosevelt's death in 1945, H. L. Mencken predicted in his diary that Roosevelt would be remembered as a great president, "maybe even alongside Washington and Lincoln," opining that Roosevelt "had every quality that morons esteem in their heroes.""
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I skipped the meeting, but the Memos showed that Gunner Asch
in rec.crafts.metalworking :

    But by 1934 it was obvious, every time you saw the light at the end of the tunnel, you could be sure the Government would come along and make more tunnel.
    Sec Treas Morgantue testified in 1939 that they'd spent all the money, and no reduction in unemployment had resulted. But the National Debt _was_ higher. -- pyotr filipivich We will drink no whiskey before its nine. It's eight fifty eight. Close enough!
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On Sat, 14 Feb 2009 13:41:42 -0800, pyotr filipivich
<snip>

<snip> -------- On the other hand US unemployment never reached the extreme levels it did in other countries, large numbers of people did not starve to death [although there was not a national obesity problem either...] and there was not a "popular revolution," although it got close several times. Additionally, many useful projects, many still in use in my area, were constructed by the WPA/PWA/CCC, so the money was not entirely wasted.
Everything considered, the US dodged a bullet in 1929-39.
Where the stupidity and arrogance comes in 2008/09 is not that we are again spending money on what are quite likely a number of futile or mis guided attempts to stave off or mitigate an economic disaster, but that we have another economic disaster of such magnitude and extent, that we as a nation feel compelled to again spend such sums, especially as all the experience and preventative measures enacted, and all the lessons learned as the result of the last economic h-bomb barrage [1990s dot cons], have been largely forgotten and/or systematically repealed/evaded/ignored.
The fact that such expenditures are felt necessary is one thing, but another thing is that items should have been included in the various stimulus bills such supplemental appropriations for the BLS/BEA/GAO etc. for increased staffing and monitoring of not only how these funds are spent, but the actual results as these wend their way through the economy [or not if they wind up in a safe somewhere]. As it stands now, we are spreading money around like fertilizer, hoping that something grows. While something may indeed grow as the result of the random application of fertilizer, it may well be crabgrass or ragweed... [achoo, achoo]
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
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Sounds like flooding money into Iraq all over again. I hope the left is just as critical about it.
Wes
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wrote:

I don't know how you make that comparison, Wes. The money flooded into Iraq was for the sake of military conquest of a dictatorship, first, and then for a cockeyed idea of building a nation in our image from the remains. The stimulus spending is, first, to get money in the hands of the unemployed or underemployed to restore consumption, and, second, to kickstart some infrastructure projects and some long-term investments in education and energy.
How in the world can those two things sound alike?
-- Ed Huntress
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On Sat, 14 Feb 2009 19:38:16 -0500, "Ed Huntress"
<snip>

<snip> ------- Indeed, and the money that goes into and stays in the bank's vault does neither. Which is another reason to fund "projects" rather than mail out "rebate" checks, or even worse, "inject" banking capital. Given today's environment, individual "rebate" checks go into savings, savings go into the bank vault. Funded projects makes the money circulate at least once before disappearing.
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
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I was remarking to Georges concern that there isn't funds set aside for oversight. If you remember pallets of money was shipped into Iraq with loose standards on accounting for it. That lead to cries of where did the money go.
How will the american people know the money spent for stimulus is well spent?
Does congress really want the funds properly accounted for?
Wes
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wrote:

Oh, OK. I misunderstood.

We won't. The thing is, we wouldn't know if it was well-spent, either, if we knew where every dollar went. And any two economists would argue over each dollar if they knew.

I doubt it. But saying they do is good politics.
This whole thing has a hierarchy of objectives, and the first one is what I stated above. It's important to remember that real money doesn't disappear. It isn't "burned." Someone acquires it; for purposes of the stimulus, the key thing is that they spend it. One hopes that they acquire it by doing something useful, but that isn't essential to the first objective.
Then the people or companies that acquired that money when it was spent use it, one hopes, to expand their production because they now have a market that they didn't have before. And thus they hire some people, who thus acquire some money, and spend it. And so on.
The idea is to get money moving again -- the money has to acquire what economists call "velocity." I think John said something about this in the past day or two. The economy moves when money moves. When it doesn't move -- when it's used to retire debt, for example -- nothing positive happens to the GDP and only a small fraction goes toward investment. Mostly it just goes to retire the *banks'* debt, or to pump up their reserves. Those are good things but that's not what you need when the economy is stalled.
Now, while you're handing out money, it would be nice, as I said, if it was in exchange for doing something useful. And while the government is deciding what useful things that money might be used for, it would be nice if it was used to build things that would help our economy move ahead. Then the arguments start, between those with an agenda to, say, improve education, and health care, and infrastructure, and who think that those are the things by which we measure "moving ahead," and those who don't want to hand out money in the first place, but who *definitely* don't want to see government directing the expansion of the economic commons. In other words, they really don't want to see more money go to education, health care, etc.
The upshot is that we have a battle between those who have their eye on the first objective and who are willing to leave the question of which artery we're going to use to transfuse the money for later, as long as it's done quickly -- stick it in any old artery that's available -- and it doesn't get bogged down in arguments over unknowable details; and those who want to further another agenda by holding out until they coerce the first group to follow their tune.
The latter group happen to be the ones who presided over the collapse in the first place. They call themselves "conservatives," although many would argue with their self-described label. My hope is that they're ignored, that Frank Rich is right in his latest column:
http://www.nytimes.com/2009/02/15/opinion/15rich.html?_r=1
...and that the conservatives just got outsmarted by one very smart politician who happens to be our president.
-- Ed Huntress
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wrote:

I almost sent you a link to that Ed, but figured you'd get to it on your own. He's certainly nailed my view of today's Republican party well enough. What the administration does next will reveal the motives behind the stimulus bill just passed.
JC
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wrote:

I never miss a Frank Rich editorial, just for the writing alone, even if I don't care about the subject.
Yeah, sometimes he rings the facts like a bell. There is a bit of wishful thinking in there but his analysis of what just happened hits several marks that most of the press missed. And to think, Frank Rich used to be stuck as a theater reviewer. <g>
BTW, I have a short one for you and George from the March issue of _Harper's_ that I'm going to send you as soon as it becomes available. I have the print edition but they don't put it online for a while after that. It's Lapham's best editorial in many years, IMO.
-- Ed Huntress
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<snip>

<snip> =====Fallout continues on this.
That much money with these few controls raised "moral hazzard" to a whole new level. http://www.iht.com/articles/2009/02/15/america/graft.php?ref anews.com http://www.cbsnews.com/stories/2009/02/01/iraq/main4767378.shtml http://article.wn.com/view/2009/02/15/Inquiry_on_graft_in_Iraq_focuses_on_US_officers /
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
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--------- As was proven in S. Vietnam, flooding a country with money is a sure way to kill it. There were girls making more in the PXs/Commissaries than bank presidents. Instant chaos.
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
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